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What: H&R Block (NYSE: HRB ) shares are down 11.5% in trading today, with more than three times the volume of an average day.
So what: H&R Block announced it may not offer tax refund loans during the upcoming 2011 tax season because of a disagreement with HSBC (NYSE: HBC ) , which underwrites refund loans for the company. The Internal Revenue Service will no longer provide lenders a digital indicator that helps them know whether consumers qualify for the refund they have filed for, and as a result, HSBC no longer wants to provide the loans.
Now what: H&R Block has sued HSBC. H&R Block has a contract with the bank to supply refund loans through 2013, and doesn't view the IRS' decision to withdraw its digital indicator as a reason for HSBC to stop providing the loans. Historically, tax preparation services such as H&R Block and Jackson Hewitt (NYSE: JTX ) have promoted refund loans as a way for consumers to get instant cash when they file their returns. Cash-strapped consumers may opt for an alternate tax filing services if H&R Block isn't able to resolve the dispute with HSBC.
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